Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2024

WAUWATOSA, Wis., Jan. 28, 2025 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.2 million, or $0.28 per diluted share, for the quarter ended December 31, 2024, compared to net loss of $40,000, or less than $0.01 per diluted share, for the quarter ended December 31, 2023. Net income per diluted share was $1.01 for the year ended December 31, 2024, compared to net income per diluted share of $0.46 for the year ended December 31, 2023. “We are pleased with the company's performance compared to the prior year and looking to build off of the positives from 2024,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. “We achieved loan growth, achieved core deposit growth (excluding brokered certificates of deposit), and continued to maintain strong asset quality metrics. The interest rate environment created challenges for both the Community Banking and Mortgage Banking segments even with the 100 bps cut in the Federal Funds rate during the second half of the year. The Mortgage Banking segment remained profitable due in large part to our continued focus on cost control as funding volumes are still facing headwinds from the higher fixed-rate mortgage rates. Waterstone Financial, Inc. remained active in share repurchases and continued to pay out dividends, as we are committed to shareholder returns.” Highlights of the Quarter Ended December 31, 2024 Waterstone Financial, Inc. (Consolidated) Consolidated net income of Waterstone Financial, Inc. totaled $5.2 million for the quarter ended December 31, 2024, compared to a net loss of $40,000 for the quarter ended December 31, 2023.Consolidated return on average assets was 0.94% for the quarter ended December 31, 2024, compared to (0.01)% for the quarter ended December 31, 2023.Consolidated return on average equity was 6.05% for the quarter ended December 31, 2024, and (0.05)% for the quarter ended December 31, 2023.Dividends declared during the quarter ended December 31, 2024, totaled $0.15 per common share.During the quarter ended December 31, 2024, we repurchased approximately 194,000 shares at a cost (including the federal excise tax) of $2.8 million, or $14.43 per share.Nonperforming assets as a percentage of total assets was 0.28% at December 31, 2024, 0.25% at September 30, 2024, and 0.23% at December 31, 2023.Past due loans as a percentage of total loans was 0.95% at December 31, 2024, 0.63% at September 30, 2024, and 0.68% at December 31, 2023. Book value per share was $17.53 at December 31, 2024, and $16.94 at December 31, 2023. Community Banking Segment Pre-tax income totaled $6.7 million for the quarter ended December 31, 2024, which represents a $1.4 million, or 26.0%, increase compared to $5.3 million for the quarter ended December 31, 2023.Net interest income totaled $12.9 million for the quarter ended December 31, 2024, which represents a $830,000, or 6.9%, increase compared to $12.1 million for the quarter ended December 31, 2023.Average loans held for investment totaled $1.68 billion during the quarter ended December 31, 2024, which represents an increase of $21.5 million, or 1.3%, compared to $1.66 billion for the quarter ended December 31, 2023. The increase was primarily due to increases in the construction, commercial real estate, and multi-family mortgages. Average loans held for investment decreased $6.3 million compared to $1.69 billion for the quarter ended September 30, 2024. The decrease was primarily due to decreases in construction and one- to four-family mortgages.Net interest margin increased 17 basis points to 2.42% for the quarter ended December 31, 2024 compared to 2.25% for the quarter ended December 31, 2023, which was primarily driven by an increase in weighted average yield on loans receivable and held for sale offset by a result of an increase in weighted average cost of deposits and borrowings as the federal funds rate increases resulted in increased funding rates. Net interest margin increased 29 basis points compared to 2.13% for the quarter ended September 30, 2024, primarily driven by an increase in weighted average yield on loans receivable and held for sale and a decrease in weighted average cost of borrowings. Past due loans at the community banking segment totaled $12.8 million at December 31, 2024, $8.0 million at September 30, 2024, and $7.9 million at December 31, 2023.The segment had a provision for credit losses related to funded loans of $61,000 for the quarter ended December 31, 2024, compared to a negative provision for credit losses related to funded loans of $17,000 for the quarter ended December 31, 2023. The current quarter increase was primarily due to an increase in the qualitative factors primarily related to increases in economic risks related to commercial real estate loans during the quarter offset by a decrease in historical loss rates. The provision for credit losses related to unfunded loan commitments was $270,000 for the quarter ended December 31, 2024, compared to a negative provision for credit losses related to unfunded loan commitments of $533,000 for the quarter ended December 31, 2023. The provision for credit losses related to unfunded loan commitments for the quarter ended December 31, 2024, was due primarily to an increase of construction loans that are currently waiting to be funded compared to the prior quarter end.The efficiency ratio, a non-GAAP ratio, was 51.54% for the quarter ended December 31, 2024, compared to 63.26% for the quarter ended December 31, 2023.Average core deposits (excluding brokered and escrow accounts) totaled $1.27 billion during the quarter ended December 31, 2024, an increase of $65.8 million, or 5.4%, compared to $1.21 billion during the quarter ended December 31, 2023. Average deposits increased $28.8 million, or 9.2% annualized, compared to $1.25 billion for the quarter ended September 30, 2024. The increases were primarily due to an increase in certificates of deposit balances. The segment had $94.3 million in brokered certificate of deposits at December 31, 2024. Mortgage Banking Segment Pre-tax loss totaled $625,000 for the quarter ended December 31, 2024, compared to a $6.0 million of pre-tax loss for the quarter ended December 31, 2023.Loan originations increased $12.3 million, or 2.7%, to $470.7 million during the quarter ended December 31, 2024, compared to $458.4 million during the quarter ended December 31, 2023. Origination volume relative to purchase activity accounted for 82.1% of originations for the quarter ended December 31, 2024, compared to 95.7% of total originations for the quarter ended December 31, 2023.Mortgage banking non-interest income increased $1.4 million, or 8.9%, to $17.5 million for the quarter ended December 31, 2024, compared to $16.0 million for the quarter ended December 31, 2023.Gross margin on loans sold totaled 3.74% for the quarter ended December 31, 2024, compared to 3.51% for the quarter ended December 31, 2023.Total compensation, payroll taxes and other employee benefits decreased $1.1 million, or 7.4%, to $13.8 million during the quarter ended December 31, 2024, compared to $14.9 million during the quarter ended December 31, 2023. The decrease primarily related to decreased salary expense, health insurance expense, and sign-on incentives driven by reduced employee headcount and fewer new branches added over the past year. About Waterstone Financial, Inc. Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 states. For more information about WaterStone Bank, go to http://www.wsbonline.com. Forward-Looking Statements This press release contains statements or information that may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.” Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements. Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release. Non-GAAP Financial Measures Management uses non-GAAP financial information in its analysis of the Company's performance. Management believes that this non-GAAP measure provides a greater understanding of ongoing operations and enhance comparability of results of operations with prior periods. The Company’s management believes that investors may use this non-GAAP measure to analyze the Company's financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in this measure and that different companies might calculate this measure differently. Contact: Mark R. GerkeChief Financial Officer414-459-4012markgerke@wsbonline.com WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited) For The Three Months EndedDecember 31, For The Twelve Months EndedDecember 31, 2024 2023 2024 2023 (In Thousands, except per share amounts) Interest income: Loans $26,391 $24,288 $103,066 $90,148 Mortgage-related securities 1,136 1,081 4,496 4,053 Debt securities, federal funds sold and short-term investments 1,525 1,325 5,606 5,007 Total interest income 29,052 26,694 113,168 99,208 Interest expense: Deposits 11,410 8,253 40,573 25,738 Borrowings 4,807 6,685 26,427 23,255 Total interest expense 16,217 14,938 67,000 48,993 Net interest income 12,835 11,756 46,168 50,215 Provision (credit) for credit losses 367 (435) (168) 656 Net interest income after provision (credit) for loan losses 12,468 12,191 46,336 49,559 Noninterest income: Service charges on loans and deposits 626 328 2,060 1,819 Increase in cash surrender value of life insurance 407 337 1,969 1,710 Mortgage banking income 17,365 15,830 83,565 75,686 Other 607 381 1,708 1,970 Total noninterest income 19,005 16,876 89,302 81,185 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 18,423 20,061 81,078 84,096 Occupancy, office furniture, and equipment 1,579 2,021 7,573 8,323 Advertising 727 1,030 3,554 3,779 Data processing 1,233 1,212 4,978 4,653 Communications 224 269 922 988 Professional fees 1,114 907 3,184 2,686 Real estate owned 12 1 26 4 Loan processing expense 486 756 3,090 3,428 Other 1,469 3,405 7,231 11,755 Total noninterest expenses 25,267 29,662 111,636 119,712 Income (loss) before income taxes (benefit) 6,206 (595) 24,002 11,032 Income tax expense (benefit) 996 (555) 5,314 1,657 Net income (loss) $5,210 $(40) $18,688 $9,375 Income (loss) per share: Basic $0.28 $(0.00) $1.01 $0.47 Diluted $0.28 $(0.00) $1.01 $0.46 Weighted average shares outstanding: Basic 18,335 19,380 18,556 20,158 Diluted 18,396 19,398 18,589 20,196 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, December 31, 2024 2023 (Unaudited) Assets (In Thousands, except per share amounts) Cash $35,182 $30,667 Federal funds sold 4,302 5,493 Interest-earning deposits in other financial institutions and other short term investments 277 261 Cash and cash equivalents 39,761 36,421 Securities available for sale (at fair value) 208,549 204,907 Loans held for sale (at fair value) 135,909 164,993 Loans receivable 1,680,576 1,664,215 Less: Allowance for credit losses ("ACL") - loans 18,247 18,549 Loans receivable, net 1,662,329 1,645,666 Office properties and equipment, net 19,389 19,995 Federal Home Loan Bank stock (at cost) 20,295 20,880 Cash surrender value of life insurance 74,612 67,859 Real estate owned, net 505 254 Prepaid expenses and other assets 48,259 52,414 Total assets $2,209,608 $2,213,389 Liabilities and Shareholders' Equity Liabilities: Demand deposits $171,115 $187,107 Money market and savings deposits 283,243 273,233 Time deposits 905,539 730,284 Total deposits 1,359,897 1,190,624 Borrowings 446,519 611,054 Advance payments by borrowers for taxes 5,630 6,607 Other liabilities 58,427 61,048 Total liabilities 1,870,473 1,869,333 Shareholders' equity: Preferred stock - - Common stock 193 203 Additional paid-in capital 91,214 103,908 Retained earnings 277,196 269,606 Unearned ESOP shares (10,682) (11,869)Accumulated other comprehensive loss, net of taxes (18,786) (17,792)Total shareholders' equity 339,135 344,056 Total liabilities and shareholders' equity $2,209,608 $2,213,389 Share Information Shares outstanding 19,343 20,315 Book value per share $17.53 $16.94 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited) At or For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023 (Dollars in Thousands, except per share amounts) Condensed Results of Operations: Net interest income $12,835 $11,517 $10,679 $11,137 $11,756 Provision (credit) for credit losses 367 (377) (225) 67 (435)Total noninterest income 19,005 22,552 26,497 21,248 16,876 Total noninterest expense 25,267 28,560 30,259 27,550 29,662 Income (loss) before income taxes (benefit) 6,206 5,886 7,142 4,768 (595)Income tax expense (benefit) 996 1,158 1,430 1,730 (555)Net income (loss) $5,210 $4,728 $5,712 $3,038 $(40)Income (loss) per share – basic $0.28 $0.26 $0.31 $0.16 $(0.00)Income (loss) per share – diluted $0.28 $0.26 $0.31 $0.16 $(0.00)Dividends declared per common share $0.15 $0.15 $0.15 $0.15 $0.15 Performance Ratios (annualized): Return on average assets - QTD 0.94% 0.83% 1.02% 0.56% -0.01%Return on average equity - QTD 6.05% 5.55% 6.84% 3.56% -0.05%Net interest margin - QTD 2.42% 2.13% 2.01% 2.15% 2.25% Return on average assets - YTD 0.84% 0.81% 0.79% 0.56% 0.44%Return on average equity - YTD 5.48% 5.30% 5.17% 3.56% 2.62%Net interest margin - YTD 2.17% 2.09% 2.08% 2.15% 2.46% Asset Quality Ratios: Past due loans to total loans 0.95% 0.63% 0.76% 0.64% 0.68%Nonaccrual loans to total loans 0.34% 0.32% 0.33% 0.29% 0.29%Nonperforming assets to total assets 0.28% 0.25% 0.25% 0.23% 0.23%Allowance for credit losses - loans to loans receivable 1.09% 1.07% 1.10% 1.10% 1.11% WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESSUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS(Unaudited) At or For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023 Average balances (Dollars in Thousands) Interest-earning assets Loans receivable and held for sale $1,819,574 $1,870,627 $1,859,608 $1,805,102 $1,797,988 Mortgage related securities 168,521 170,221 171,895 172,077 172,863 Debt securities, federal funds sold and short term investments 124,658 115,270 107,992 110,431 106,504 Total interest-earning assets 2,112,753 2,156,118 2,139,495 2,087,610 2,077,355 Noninterest-earning assets 100,627 104,600 104,019 103,815 105,073 Total assets $2,213,380 $2,260,718 $2,243,514 $2,191,425 $2,182,428 Interest-bearing liabilities Demand accounts $92,247 $89,334 $91,300 $87,393 $91,868 Money market, savings, and escrow accounts 306,478 304,116 293,483 281,171 302,121 Certificates of deposit - retail 810,340 786,228 758,252 739,543 735,418 Certificates of deposit - brokered 59,254 - - - - Total interest-bearing deposits 1,268,319 1,179,678 1,143,035 1,108,107 1,129,407 Borrowings 464,964 600,570 622,771 602,724 549,210 Total interest-bearing liabilities 1,733,283 1,780,248 1,765,806 1,710,831 1,678,617 Noninterest-bearing demand deposits 87,889 91,532 93,637 92,129 102,261 Noninterest-bearing liabilities 49,645 49,787 48,315 45,484 56,859 Total liabilities 1,870,817 1,921,567 1,907,758 1,848,444 1,837,737 Equity 342,563 339,151 335,756 342,981 344,691 Total liabilities and equity $2,213,380 $2,260,718 $2,243,514 $2,191,425 $2,182,428 Average Yield/Costs (annualized) Loans receivable and held for sale 5.75% 5.65% 5.54% 5.46% 5.36%Mortgage related securities 2.67% 2.66% 2.63% 2.57% 2.48%Debt securities, federal funds sold and short term investments 4.85% 5.05% 4.82% 4.82% 4.94%Total interest-earning assets 5.46% 5.39% 5.27% 5.18% 5.10% Demand accounts 0.11% 0.11% 0.11% 0.11% 0.11%Money market and savings accounts 2.00% 1.94% 1.89% 1.79% 1.64%Certificates of deposit - retail 4.53% 4.54% 4.41% 4.19% 3.76%Certificates of deposit - brokered 4.18% 0.00% 0.00% 0.00% 0.00%Total interest-bearing deposits 3.58% 3.53% 3.42% 3.26% 2.90%Borrowings 4.11% 4.77% 4.92% 4.54% 4.83%Total interest-bearing liabilities 3.72% 3.95% 3.95% 3.71% 3.53% COMMUNITY BANKING SEGMENTSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited) At or For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023 (Dollars in Thousands) Condensed Results of Operations: Net interest income $12,886 $12,250 $11,234 $11,598 $12,056 Provision (credit) for credit losses 331 (302) (279) 105 (550)Total noninterest income 1,595 1,227 1,491 990 894 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 4,883 5,326 5,116 5,360 5,397 Occupancy, office furniture and equipment 825 904 983 1,000 916 Advertising 204 311 229 174 363 Data processing 691 720 687 693 626 Communications 89 80 72 65 75 Professional fees 196 190 177 208 186 Real estate owned 12 - 1 13 1 Loan processing expense - - - - - Other 563 602 672 691 628 Total noninterest expense 7,463 8,133 7,937 8,204 8,192 Income before income taxes 6,687 5,646 5,067 4,279 5,308 Income tax expense 1,399 941 718 1,639 1,234 Net income $5,288 $4,705 $4,349 $2,640 $4,074 Efficiency ratio - QTD (non-GAAP) 51.54% 60.35% 62.37% 65.17% 63.26%Efficiency ratio - YTD (non-GAAP) 59.58% 62.58% 63.77% 65.17% 56.86% MORTGAGE BANKING SEGMENTSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited) At or For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023 (Dollars in Thousands) Condensed Results of Operations: Net interest loss $(92) $(760) $(552) $(541) $(367)Provision (credit) for credit losses 36 (75) 54 (38) 115 Total noninterest income 17,455 21,386 25,081 20,328 16,028 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 13,781 15,930 16,886 14,756 14,881 Occupancy, office furniture and equipment 754 953 1,046 1,108 1,105 Advertising 523 615 758 740 667 Data processing 542 570 549 508 583 Communications 135 152 168 161 194 Professional fees 917 379 569 520 704 Real estate owned - - - - - Loan processing expense 486 697 861 1,046 756 Other 814 1,261 1,641 617 2,701 Total noninterest expense 17,952 20,557 22,478 19,456 21,591 (Loss) income before income taxes (benefit) expense (625) 144 1,997 369 (6,045)Income tax (benefit) expense (428) 194 684 71 (1,827)Net (loss) income $(197) $(50) $1,313 $298 $(4,218) Efficiency ratio - QTD (non-GAAP) 103.39% 99.67% 91.64% 98.33% 137.86%Efficiency ratio - YTD (non-GAAP) 97.74% 96.23% 94.62% 98.33% 116.99% Loan originations $470,650 $558,729 $634,109 $485,109 $458,363 Purchase 82.1% 88.9% 92.7% 93.0% 95.7%Refinance 17.9% 11.1% 7.3% 7.0% 4.3%Gross margin on loans sold(1) 3.74% 3.83% 3.93% 4.10% 3.51% (1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2024

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